Abstract Ethnopharmacological relevance Cordyceps militaris is a well-known medicinal mushroom used for treatment of asthma, and other bronchial and lung inflammatory diseases. Aim of the study To investigate the anti-inflammatory effects and mechanism of Cordyceps militaris extract on a murine model of acute colitis. Materials and methods We induced colitis using DSS for 1 week. The disease activity index (DAI) took into account body weight loss, diarrhea, and bleeding. Colon length and crypt length were measured using a microscope. Structural changes of the colon were observed by H&E staining. NO, iNOS, and TNF-α were determined using the Griess assay. iNOS protein was determined using western blotting and quantitative reverse-transcriptase polymerase chain reaction, respectively. Degranulated mast cells in colon tissue were stained using toluidine blue. The degree of degranulated RBL-2H3 cells was measured by the β-hexosaminidase assay. Results Cordyceps militaris extract significantly attenuated DSS-induced DAI scores (e.g., body weight loss, diarrhea, gross bleeding). Cordyceps militaris extract also effectively prevented shortening of colon length and crypt length. Histological analysis indicated that Cordyceps militaris extract suppressed epithelial damage, loss of goblet cells, loss of crypts, and infiltration of inflammatory cells induced by DSS. In addition, Cordyceps militaris extract inhibited iNOS and TNF-α mRNA expression in colon tissue of DSS-induced colitis and in LPS-stimulated RAW264.7 cells. Cordyceps militaris extract suppressed degranulation of mast cells in the colon of mice with DSS-induced colitis and in antigen-stimulated mast cells. Conclusion These results suggest that Cordyceps militaris extract has anti-inflammatory activity in DSS-induced acute colitis by down-regulating production and expression of inflammatory mediators. These findings suggest that Cordyceps militaris extract might be applied as an agent for prevention or treatment of inflammatory bowel diseases (IBDs).